Tanker Market - November 2017

Source: OPEC_RP171109 11/13/2017, Location: Europe

In October, tanker spot freight rates for dirty vessels edged up across all classes trading on most major
routes ahead of winter season requirements. VLCC spot freight rates achieved the strongest growth
compared with the smaller classes on the back of healthy tonnage demand on the main trading routes.

In the dirty segment, VLCC, Suezmax and Aframax average spot freight rates increased by 37%, 12%, and
12%, respectively, over a month earlier. These gains in spot rates were mostly driven by higher seasonal
tonnage demand, as well as increased transit and port delays.

Clean tanker freight rates dropped on all reported routes with no exception in October, dropping for East
and West of Suez routes by 9% and 4%, respectively. The clean tanker market was mostly uneventful in
October, while vessel oversupply persisted. Despite lower monthly rates, clean tanker rates remain well
above the levels seen in October a year ago.

Spot fixtures
In October, OPEC spot fixtures dropped by 9.6% from the previous month to average 10.82 mb/d,
according to preliminary data. The drop came on the back of lower spot fixtures on the Middle East-to-East
and Middle East-to-West routes, which went down by 0.45 mb/d and 0.15 mb/d, respectively, in October to
average 5.39 mb/d and 1.99 mb/d. In addition, fixtures outside the Middle East were down by 0.55 mb/d.

Sailings and arrivals
OPEC sailings dropped by 0.26 mb/d, or 1.1%, in October to stand at 23.69 mb/d. Middle East sailings also
dropped, down by 0.16 mb/d over the previous month to average 17.11 mb/d.

Crude oil arrivals increased in October at North American and West Asian ports, up by 0.4% and 4.6%,
respectively, over the previous month, while arrivals in European and Far Eastern ports showed a drop of
1.4% and 2.1%, respectively, from the month before.

Dirty tanker freight ratesVLCC
Approaching winter, VLCC spot freight rates showed notable gains in October from a month before across
all reported routes. On average, VLCC spot freight rates soared by 37% m-o-m to stand at WS55 points, up
by 4% y-o-y. Rates increased on all major trading routes, mainly on the Middle East-to-East route where spot
freight rates went up by WS24 points from a month before to average WS68 points. Similarly, the chartering
market in West Africa (WAF) strengthened and earnings in both WAF and Middle East were higher. The
VLCC market saw high activity to eastern destinations, despite holidays in the Fareast. VLCC spot freight
rates on the WAF-to-East route rose by 33% to average WS68 points. October tonnage availability saw an
occasional tightening as market activities saw the usual seasonal uptick.

VLCC Middle East-to-West spot freight rates recovered, though to a lesser extent, up by 22% in October to
stand at WS28 points, but remained below the level in the same month a year earlier. Generally, VLCCs saw
healthy demand in October on all major trading routes though spot freight rates gains varied, with a noted
difference in old and modern vessel rates.

Suezmax
Suezmax spot freight rates continued to rise by an average of 12% in October from one month earlier,
despite an excess in ships with all replacement requirements having been met easily. Average Suezmax
freight rates remained healthy, supported by higher rates registered for tankers trading on the Northwest
Europe (NWE)-to-US Gulf Coast (USGC) route, which gained 8% to stand at WS60 points. Suezmax spot
freight rates for tankers operating on the West Africa-to-USGC route went up by 17% from a month before to
stand at WS79 points. The Suezmax market experienced occasional softer sentiment in West Africa as
activity levels varied. In the North Sea, Suezmax saw limited inquiries, while rates in the Black Sea and
Mediterranean were supported by vessels tightening and a spill-over effect from the firming Aframax market,
which supported Suezmax demand on a part-cargo basis as a suitable alternative.

Aframax
Spot freight rates in the Aframax market saw mixed movement on different routes. Average Aframax spot
freight rates rose in October, although the larger vessel classes saw much stronger gains. Average spot
Aframax rates increased by WS11 points from a month earlier, as a result of higher rates seen on different
reported routes. The Caribbean-to-US East Coast (USEC) route was an exception, decreasing by 13% in
October on persisting tonnage over supply, reversing part of the essential gains that were achieved on that
route in the previous month, though remaining well above rates of October 2016.

Aframax spot freight rate gains were mainly driven by higher rates in the Mediterranean on the back of
tightening Aframax availability for early November and increased transit delays in the Turkish straits.
Spot freight rates on the Mediterranean-to-Mediterranean and Mediterranean-to-NWE routes rose by 26%
and 27%, respectively, from the previous month to stand at WS135 and WS133 points. Aframax rates went
up despite competition seen from Suezmax vessels on part-cargo loadings.

The Aframax market in the North Sea and Baltics strengthened, as rates experienced an uptick on the back
of lesser tonnage availability and a busy fixing programme, with severe weather conditions and ullage
problems further supporting rates.

Clean tanker freight rates
Clean tanker spot freight rates dropped 9% on average in October, compared with the previous month.
The decline was registered on fixtures in both directions of Suez, where rates edged down on all selected
routes.

In the East, spot freight rates for tankers operating on the Middle East-to-East and Singapore-to-East routes
dropped by WS15 points and WS12 points, respectively, from the previous month. The medium-range tanker
market was quiet in October, with cargo flows being insufficient to grant any growth to freight rates especially
taking into account the prevailing tonnage surplus, leading to an overall reduction in freight rates in the
month.

Similarly, the clean tanker market in the West was mostly uneventful in October and ships were lining up
even for prompt dates. Consequently, clean spot freight rates on the NWE-to-USEC route dropped by
WS23 points to stand at WS111 points. The Mediterranean-to-Mediterranean and Mediterranean-to-NWE
routes also dropped by 4% and 3%, respectively, to stand at WS158 and WS169 points, respectively.